The Government-led inquiry into Labor’s franking credit policy has, unsurprisingly, come to the conclusion that it’s a bad idea. But Labor has called the whole process a “farce”.
The report on the inquiry into the implications of removing refundable franking credits, released on what will likely be the last Parliamentary sitting day before the election, recommends “against the removal of refundable franking credits”.
Liberal MP Tim Wilson, who chaired the Committee, said on the release of the report: “The committee has considered the case for removing refundable franking credits for individuals and SMSFs and is of the view the policy is inequitable and deeply flawed.”
“In particular, abolishing refundable franking credits will unfairly hit people of modest incomes who have already retired, and who are unlikely to be able to return to the workforce to make up the income they will lose.”
“It will force many people, who have saved throughout their lives to be independent in retirement onto the Age Pension. This undermines any objective that it may raise revenue and reduce dependence on taxpayers resulting from an ageing population.”
The majority of the Committee also recommends that “any policy that could reduce Australian retirees’ income by up to a third should only be considered as part of an equitable package for wholesale tax reform”. The last attempt at wholesale tax reform was the Coalition’s Tax White Paper process – which didn’t advance past the discussion paper stage before it was axed after Malcolm Turnbull became Prime Minister.
The Labor members involved in the inquiry have called it a “farce”. The Labor dissenting report said it was “highly unusual” for a House of Representatives inquiry to be conducted into an opposition policy.
“The purpose of the House of Representatives Economics Committee is to scrutinise government legislation by conducting public inquiries and making recommendations to the Parliament regarding that legislation. Devoid of any economic agenda or policies, the Government has chosen to use the committee to attack an Opposition proposal.”
“This inquiry has been more in the nature of a political campaign, than a parliamentary inquiry at tax payer’s expense.”
Labor used its dissenting report to reiterate criticisms, including the cost of the inquiry, the apparent involvement of Wilson Asset Management, and the Stop the Retirement Tax website.
Labor also accused Tim Wilson of refusing to release correspondence received that was critical of the inquiry.
“Many Australians have voiced their anger at the partisan nature of this inquiry and the waste of tax payer dollars via email and letters to the Committee,” said the Labor members.
According to them, the Committee has not published 1,738 pieces of correspondence received by the committee, including “critical analysis from 2 former members of parliament”.
“The Labor members strongly urge the release of these documents in the interests of transparency and accountability.”
“The Government representatives having regularly stated that this inquiry was to give a voice to people affected by a proposed opposition policy, yet when those voices express dissent they are suppressed.”
The Committee did publish 1,777 of the submissions it received, pointing to time constraints and the large number of submissions as the reason for not publishing more.
Analysis by Nick Evershed of The Guardian indicates that upwards of 40% of the submissions include pro-forma text written by Tim Wilson. Mr Wilson was encouraging people to make submissions to the inquiry using his Stop the Retirement Tax website, which had optional pre-written text.